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INDUSTRIAL

    Total Assessed Value Reductions: $ 900,000,000

    Total Tax Savings: 9 Million Dollars+

    There is no limit to the number of unique applications for industrial properties. Over the years we have represented over 700 industrial properties including:

    Biotech, light industrial; heavy industrial; warehouse; mini-storage; self-storage; manufacturing; R&D; food processing; wholesale distribution; lumber yards and many others. We have obtained numerous reductions for properties with site specific improvements that are designed to meet the needs of the current tenant but fail to increase the property value.

     

    Case Study #1: Publishing company sale/leaseback creates potential property tax liability!

    Case Study #2: Investment firm nets substantial property tax savings despite tremendous cash flow!

    Case Study #3: Industrial Park with 1/2 million square feet assessed at cost!

    Case Study #4: Owner of a refrigerated warehouse heats up then cools down!

     

    Case Study #1: Publishing company sale/leaseback creates potential property tax liability!

    Total Tax Savings: $ 125,000

    In order to raise operating capital a large publishing firm in Southern California sold their Corporate Headquarters in a sale/leaseback transaction that was $1,000,000 higher than the actual “fair market value” of the real estate. They took back a long term lease well above the existing market rental rates. The assessor enrolled the sales price as the new base year value for the property relying on Rule 2 of the Revenue & Taxation Code.

    Protax LLC appealed this assessment arguing that the true value of the real estate should be limited to the real property and any additional value created by the inflated lease should be disregarded for property tax purposes. We neede to overcome the presumption of Rule 2 which presumes the sales price to represent “full cash value”. A complete analysis was prepared and submitted to the county demonstrating the property’s true taxable value based on a market information and a valuation report of the fair market value of the property. The base year assessment was reduced permanently reducing the base year value and in the ensuing tax years additional reductions were obtained using Proposition 8.

     

    Case Study #2: Investment firm nets substantial property tax savings despite tremendous cash flow!

    Total Tax Savings: $ 70,000

    Many owners believe they are not entitled to a property tax reduction if their property has a significant income stream with a positive cash flow. However, the taxable value is more dependent on overall market conditions than by the performance of the property. An investment firm discovered this principle after investing in a 100,000 square foot single tenant industrial building that was fully occupied by a AAA credit tenant. The property had a tremendous cash flow with significant rental increases over the remainder of the lease. Although the property was performing well, market values had been falling in the area for several years and existing market lease rates were now far below what this property was actually receiving under the existing lease. Property tax rules mandate that “current rental rates” must be considered when determining the income stream to be capitalized for property tax assessment purposes. The property received a significant property tax reduction.

     

    Case Study #3: 500,000 square foot Industrial Park assessed at cost!

    Total Tax Savings: $420,000

    A large developer subdivided a forty acre lot and built a 500,000 square foot industrial park.  The development catered to the biotech industry and contained a mixture of office, warehouse, engineering, manufacturing and lab space. As a result, the improvements were very expensive and the overall cost to build was much higher than most other industrial parks. The buildings were completed and the assessor enrolled cost as the base year value.

    Protax LLC challenged the base year values under Proposition 13 and subsequently filed for additional tax relief in the ensuing tax years under proposition 8. The county assessor spent many hours preparing a case to vigorously defend the assessments.  Negotiations went back and forth until a 27% reduction was granted on the entire park ultimately leading to a reduction on the assessed value of $40,000,000 saving the client $400,000+.

     

    Case Study #4: Owner of a refrigerated warehouse heats up then cools down!

    Total Tax Savings: $ 15,000

    A regional distributor of refrigerated foods invested nearly two million dollars in its industrial building in order to refrigerate its products, and shipping and receiving area. Although this expenditure was quite necessary to the business operations, it added very little value to the real estate. The owner was quite irate when he received a notice from the county informing him that the assessor added the full cost of the refrigeration units to the overall assessment on the property.

    This created a very high assessment that was not indicative of its actual fair market value. Therefore, Protax LLC filed a formal appeal in order to reduce the assessment of the refrigerated improvements down to their actual “fair market value”. The client received a $1.4 million reduction to the base year value permanently lowering the annual taxes by $15,000.